Boosts for Google, Apple Cover Up Poor Market Action

Strength in the Magnificent Seven MAGS stocks covered up some poor market action on Wednesday. A favorable antitrust ruling pushed Alphabet GOOGL up 8.5% and lifted Apple AAPL to a gain of 3.5% but outside of a few mega-caps, it was dreary action in most areas of the market with limited momentum.

Breadth was around 2,100 gainers to 3,250 decliners, and the Russell 2000 IWM lagged with a loss of 0.15%. There wasn’t a lot of aggressive selling, but there was very little interest in buying outside of the mega-cap technology names. A late-day bounce helped to hide the poor intraday action.

What is supporting the market is the great likelihood that the Fed will cut interest rates by a quarter point at its meeting in two weeks. While there is still some important data coming up, such as the August jobs report on Friday, there will have to be some very major surprises to shift the potential for a series of rate cuts.

There are still economists and pundits who question the wisdom of a rate cut while there is still a great danger of tariff-driven inflation, but there is obviously cooling in the jobs market, and Powell indicated concern about that when he spoke at Jackson Hole.

Another issue that is helping the market is that many traders are looking for the well-known September negative seasonality to occur. When there is too much anticipation of something, it is less likely to occur.

On the surface, the action didn’t look too bad on Wednesday, but if we look closely at some of the action in recent leading names, it wasn’t so hot. There were about 180 new 13-month highs, but there were also 120 new lows.

A late-day bounce helped to make things look better, but this was not an attractive day of action. Thursday, we will have a better test as the market considers some economic news and prepares for the Jobs report on Friday.

Have a good evening. I’ll see you tomorrow.

At the time of publication, DePorre had no positions in any securities mentioned.